House Hunting in ... Uruguay

Real Estate in Uruguay

Slide Show | A Minimalist Five-Bedroom House in Montevideo In the Carrasco neighborhood along the Rio de la Plata, it is on the market for $1.3 million.

Tali Kimelman for The New York Times

December 31, 2014

International Real Estate

By VIRGINIA C. McGUIRE

A Five-Bedroom Minimalist House in Montevideo

$1.3 million

This minimalist stucco and stone house in the upscale Carrasco neighborhood of Montevideo, Uruguay’s capital, was completely renovated in 2009 by Paula Di Bello, a local architect. It consists of two houses that were combined during the renovation process. The resulting 5,382-square-foot home has five bedrooms and four bathrooms, and an open floor plan unusual in the more traditional homes in the area.

The main floor has wide-plank wood floors made of lapacho, a South American hardwood also known as ipe. The living room fireplace is faced with stone and is off center, breaking up the boxy lines of the room. Windows on either side of the fireplace look out at the pool. The dining room, which is open to the living room, has a wall of built-in cabinets and shelves for displaying glassware, and a sliding-glass door to the patio.

The kitchen has large gray ceramic tiles on the floor, a double fridge and a small wine cooler that complements the larger wine cellar in the basement. A gas range is set into a center island, and the kitchen storage areas are a combination of open shelves and cabinets faced with frosted glass or wood. The kitchen window opens to allow the owners to pass food outside to the barbecue area. An extra room on the main floor is used as a studio, but could also serve as a bedroom. Upstairs, three of the bedrooms are clustered together, while an expansive 1,600-square-foot master suite is up a few steps and separated from the other rooms. The suite includes a four-piece bathroom, a massage room and a walk-in closet.

Outside, a wall of vegetation, including mature trees and shrubs, shields the house from the road, creating a private oasis. Local people enjoy kite-surfing on the sandy beach about 10 blocks from the house, and the vibrant shopping area on Avenida Arocena is a three-minute drive.

Carrasco, which is on the Rio de la Plata, an estuary, was originally a resort community for people who lived in Montevideo, but in time, it was absorbed by the city. The city center is a 20-minute drive from the house. The resort city of Punta del Este is a drive of about an hour and a half, with fishing villages and beaches along the Rio de la Plata on the way.

Carrasco is now popular with affluent families, and there are many international private schools, golf courses and high-end restaurants in the area. The historic, early-20th-century Hotel Carrasco is now the Sofitel Montevideo Casino Carrasco and Spa. The international airport is a 10-minute drive.

MARKET OVERVIEW

“Uruguay’s economy is expected to grow 3 percent in 2014, and a similar rate in 2015,” said Juan Federico Fischer, the managing partner of the law firm Fischer and Schickendantz in Montevideo. This represents a slowdown from the average 6 percent growth rate the country enjoyed from 2003 to 2013. Mr. Fischer said the slower economy can be attributed to a slump in commodity prices; Uruguay’s economy relies heavily on agricultural exports such as beef, soybeans and dairy products.

The real estate market had been growing about 8 percent a year for the last several years, Mr. Fischer said, but it has slowed in 2014. “This year has been a special year for the market,” said Carla Parodi, a real estate agent with Parodi Inmobiliaria in Montevideo.

The World Cup soccer tournament in neighboring Brazil created a lot of excitement, she said; then Uruguay’s national elections in the fall turned people’s attention away from real estate. “That made the year kind of uneven, with high peaks before the soccer games and now after the elections,” Ms. Parodi said. The market is picking up now that the election is over and economic policies for the next several years have been determined.

Because the market has been sluggish recently, many sellers are more willing to negotiate than they have been in the past, and asking prices have come down. “This year the prices are more realistic,” said Gustavo Zerbino, an agent for Bado & Perazzo Sotheby’s International Realty and the listing agent for the property.

In the Carrasco neighborhood, one of the more expensive and sought-after parts of the city, Ms. Parodi said many buyers prefer apartments or townhomes with amenities like swimming pools, private patios and round-the-clock security. The neighborhood also has a lot of people nearing retirement, who are looking to downsize while staying close to their familiar haunts. Because of these trends, apartments and newer townhomes in the more desirable parts of Carrasco sell for $372 to $418 per square foot, more than high-end single-family homes, which sell for $232 to $279 per square foot. This single-family house is priced at $242 per square foot.

The large, older homes in the historical part of Carrasco are protected by city regulations, Mr. Zerbino said. The exteriors of historic houses cannot be altered, but the interiors can, so many are being converted into embassies or company headquarters.

WHO BUYS IN MONTEVIDEO

In Montevideo, “purchases by foreigners have decreased in 2014,” Mr. Fischer said, but foreigners still make up more than a third of the buyers. Most of them are Argentine or Brazilian, but Mr. Fischer estimated that about 2.5 percent of the city’s foreign buyers are Americans. Most of Carrasco’s buyers are local people, but the district does attract some from neighboring Argentina who are looking for a quieter, less stressful life, Mr. Zerbino said. He said some European retirees are also drawn to Carrasco, especially writers and artists.

BUYING BASICS

There are no restrictions on foreign buyers in Uruguay. Mr. Zerbino said the buyer’s share of the real estate agent’s commission is 3.66 percent of the purchase price, including a value-added tax. Legal fees are about 2 percent, and transfer taxes are 1 percent.

Some buyers choose to form a corporation, which costs about $2,500 to $4,500 initially and carries additional annual tax burdens and accounting fees, according to Mr. Fischer. But buying property within a corporation can have advantages in terms of shielding assets from creditors or passing property down within a family, Mr. Fischer said. Corporate ownership also offers greater privacy for buyers, so it is not uncommon, even though the costs are higher. Since Uruguay does not restrict foreign corporations’ ownership of property, Mr. Fischer said it is common to see them buying Uruguayan real estate.

Real estate in Uruguay is typically priced in dollars because of a history of fluctuations in the value of the peso. “You can find some rentals in pesos, but even in rentals, at the high end it’s usually rented in dollars,” Ms. Parodi said. “These kinds of properties are rented to people who come from abroad.”